How does the currency system Bitcoin work ?
- BC-to-BC transactions are performed by digitally exchanging anonymous, strongly encrypted hash codes over a peer-to-peer (P2P) network. The P2P network monitors and verifies the transmission of Bitcoins between users. Each user’s Bitcoins are stored in a program called a digital wallet. It also contains each address from which the user sends and receives Bitcoins, and a private key known only to the user.
- The Bitcoin network is designed to generate no more than 21 million Bitcoins, and the network is set up to be self-regulating to counter inflation. Bitcoin s can be issued by initiating a transfer request from an address in the customer’s wallet to an address in the provider’s wallet.
- In the U.S., Bitcoins are controversial because they can be used to transfer illegal funds anonymously or to hide unreported income.
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